Not Just Consumers Cutting The TV Cord: Small Cable Companies Dropping TV Also

from the internet-is-where-it's-at dept

Wed, Oct 1st 2014 12:21pm — Mike Masnick

For years now, we've been talking about TV watchers cutting the cord and preferring to go internet-only. There are a variety of reasons for this, such as the price of cable TV these days, which keeps rising at a rapid pace, and also the simple fact that the internet provides a much better value for many people. But it turns out it's not just the viewing pubic that is cutting the cord. A bunch of smaller/regional cable companies are dropping TV from their offerings as well -- and the reasons are similar: the cost to offer TV channels keeps going up and up, and focusing on just internet service is a better deal all around. In some cases, cable companies are simply dropping expensive channels, and in other cases, they're giving up on TV altogether. From the WSJ:

The latest is Suddenlink Communications, an operator that serves about one million customers, which says it plans to drop Viacom Inc.'s TV channels, including Nickelodeon and MTV, at midnight Tuesday. Suddenlink says it has already signed long-term contracts with other channels to fill the Viacom channels' slots.

[....]

After seven years of selling customers cable-TV services, BTC Broadband got out of that business late last year and now provides just broadband and phone services. The Oklahoma company, which had been serving about 420 TV subscribers, decided it simply couldn't afford to keep paying rising fees to carry a basic lineup of channels including ESPN, TNT and MTV.

The article notes that companies offering cable TV to about 5 million current customers probably will no longer be offering such video services, almost entirely due to cost. Those companies are finding that it's just a better deal for them to focus on offering internet services as well.

We've been arguing for years that the TV business is unsustainable, but the big media companies still see it as a last beacon of hope as other parts of their business have been chipped away. Because of that, they're increasingly relying on it (hence the rapidly increasing fees). But it's unsustainable, in large part because the internet undermines the whole thing.

While we don't hear it that much any more, a decade ago, the talk of the industry was the vaunted "triple play" offering: "voice, video and data." Some analysts would add in a fourth item of "wireless" to make a "grand slam" (mixing up their baseball metaphors). But as we've been saying for a decade, that was always misleading: "voice and video" are data. You don't need "voice, video and data." You just need "data." Wireless is just a way to deliver the data. But the internet enables all of those things. The greater access that can be offered at greater speeds, unencumbered, the less specialized services for "voice and video" matter. The traditional phone business is already on the way out. Video is next. These small players leaving the video business are just an early warning shot, just like the cord cutters.

It's all data.

But this is also why the net neutrality fight is so important -- and why the big players like Comcast (while pretending otherwise) are so desperate to control things and block true net neutrality. The longer the big old media companies can keep the highly inefficient system of cable TV alive, the more money it can squeeze out of it -- and there's a LOT of money being squeezed. It won't die any time soon, but it will die off. That's just the natural progression of things when you realize that it's all just data, and a pipe that is optimized just to "deliver data" is always going to win out in the end.

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Filed Under: data, internet, net neutrality, tv
Companies: btc broadband, suddenlink communications

42 Comments

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cableaccess, 1 Oct 2014 @ 12:32pm

Goodbye cable access stations that get revenue based on the number of cable subscriptions in a region. Comcast will pay a portion of TV revenue to cable access, but not any of that internet money.
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Hephaestus (profile), 1 Oct 2014 @ 12:32pm

Over the next 20 years, the cables companies will be relegated to being just data pipes.
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DannyB (profile), 1 Oct 2014 @ 12:38pm

Re:
God we can only hope it will take less than 20 years.
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DannyB (profile), 1 Oct 2014 @ 12:41pm

Prices rise, quality of TV content goes down
Why so much reality TV crap? Because it's cheap to shovel onto cable systems.

Yet while the quality of programming goes down the price of consuming it goes up?

Something is wrong. True competition should take care of this. A problem seems to be that there is only one way of distributing made-for-TV content. (or very few ways)
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RadioactiveSmurf (profile), 1 Oct 2014 @ 12:55pm

I never cared for the statistic of "Number of Channels offered" because it doesn't account for the quality of those channels. How many are just pure infomercial channels and how many live up to their name? History channel showing ancient aliens?? TLC showing honey boo boo? Not much learning goin on there. I have also long held that TNT should be re-labled the law and order rerun channel. All those stations and nothing worth watching.
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Anonymous Coward, 1 Oct 2014 @ 1:05pm

I don't understand why TV channels even need to charge cable operators to carry them. With the sole exception of no-advertising "premium" channels, it should be the other way around. As nearly twenty minutes of every hour is paid advertising, these cable channels lose money every time a person doesn't watch them, and should be more than willing to pay cable companies for the privilege of allowing them to deliver their advertising payload to a captive population.
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jupiterkansas (profile), 1 Oct 2014 @ 1:22pm

Re:
Is there anything cable access provides that can't be done better and easier on the internet?
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JEDIDIAH, 1 Oct 2014 @ 1:45pm

Double Dipping
This is one aspect of cable that always annoyed me and one reason that I eventually cut the cord.

Although I have been effectively avoiding those commercials since the 90s through the employment of Tivo and successor technologies.
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Anonymous Coward, 1 Oct 2014 @ 1:45pm

Re:
"All those stations and nothing worth watching."

It's even worse late at night, when almost every single channel is broadcasting informercials. Though, to be honest, even infomercials are more entertaining than the mindless trash that spews out of cable TV channels these days.
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John Fenderson (profile), 1 Oct 2014 @ 2:04pm

Re: Re:
Sports, apparently. Outside of that, nothing.
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Anonymous Coward, 1 Oct 2014 @ 2:06pm

Re: Re:
price gouging
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David, 1 Oct 2014 @ 2:17pm

It will balance out
Once Viacom loses enough cable customers, it's advertising revenue will drop (since often based on number of eyes). In order to boost it's apparent reach, they will reduce the cost of cable companies to carry their channels. Until they get greedy again, and we swing the pendulum again...
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Anonymous Coward, 1 Oct 2014 @ 2:29pm

Re: Re:
"Is there anything cable access provides that can't be done better and easier on the internet?"

Yes. Advertising is slightly more effective when delivered over cable, if only because commercial skipping through DVR is more difficult to set up than ad blocking software.
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Anonymous Coward, 1 Oct 2014 @ 2:33pm

Re: Re: Re:
Techdirt has done many stories on Rojadirecta. That's what they do, sports (and are far from the only ones). And no blackout zones, ever. Sports fans can discover that there's far more content available online (officially sanctioned or otherwise) than through their cable provider.
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Anonymous Coward, 1 Oct 2014 @ 2:38pm

Re: Re: Re:
The annoying thing is the sports channels all have streaming service, but you can't buy it, you have to have a damn cable tv account. That seems incredibly stupid on their part, but I suppose they are squeezing more money out of the cable companies than they would get from individual subscribers.
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jd2112 (profile), 1 Oct 2014 @ 2:42pm

And once you start enjoying a program, they come up with a new channel more narrow focus than the original and move your program there. Of course you have to upgrade to a new, more expensive package to get that new channel.
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Patrick, 1 Oct 2014 @ 2:49pm

Re: It will balance out
I'm on a small cable company and this year they dropped Viacom programing. I ain't even mad.
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Roger Strong (profile), 1 Oct 2014 @ 3:29pm

Alternatively...
Here in Canada the cable/internet providers have a "solution." They're blocking streaming video sites.

The Comedy Network - Canada's versions of Comedy Central - lets you stream the Daily Show, Colbert Report and many other shows. My cable provider Shaw has started blocking the video streams. They're also blocking video streams from the CBC and CTV networks and more, to stop internet-only customers watching the news or hockey. Apparently Rogers is doing the same.

I've found a way around it for now. A way that's perfectly legal, though no doubt they'd insist otherwise.
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John Fenderson (profile), 1 Oct 2014 @ 3:40pm

Re: Re: Re: Re:
I don't follow sports myself, so I have little personal experience with the online availability of them. However, my wife is a huge sports freak. She constantly bemoans the fact that it's hard to access the games she wants to watch (even with cable, unless you subscribe to some CRAZY expensive packages). She's been unable to locate decent online sources, and the one time I tried to do so for her, I failed completely as well. Yes, sometimes she gets lucky, but not usually.

I'm talking about non-pirate sources. We don't do piracy, so unauthorized streams don't count.
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That One Guy (profile), 1 Oct 2014 @ 3:40pm

Re: Alternatively...
And then they wonder why VPN's/proxies are so popular...
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Guy with camera, 1 Oct 2014 @ 3:58pm

Re: cable access
@jupiterkansas
Is there anything cable access provides that can't be done better and easier on the internet?

It's not the distibution so much as the production facilities and equipment, and training. Where on the internet do I go to get free access to a studio with professional lighting gear, cameras, tripods with good fluid heads that don't bind or wobble, shotgun mikes with boom poles, pro editing software (Final Cut Pro, Adobe Premier, Avid, or the like), maybe a mobile production truck? Mostly available for free loan. Many (probably most) cable access producers do put the shows on the internet, but the internet doesn't do squat to help produce them.
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Anonymous Coward, 1 Oct 2014 @ 5:34pm

"Our business model is dying! We must charge people more money; that's how we'll convince them to buy!"

Way to go, geniuses!
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Eldakka (profile), 1 Oct 2014 @ 5:35pm

Re: Re: Re: Re: Re:
Yes, sometimes she gets lucky, but not usually.
Wow dude, maybe you should take better care of her? ;)
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Smoochy18 (profile), 1 Oct 2014 @ 8:07pm

Streaming is great, but live TV is key
It's no surprise that cable companies are becoming broadband companies. They have the infrastructure, and it's a heck of a lot more profitable than delivering TV.The business of TV delivery in the U.S. is broken. It's not the fault of any one entity (broadcasters, content owners, service providers), they are all tied to their archaic business models. But the consumer has become lost in the middle while these entities fail to work together to solve a problem. Ergo - cord cutting. Streaming on-demand content is fantastic. But what we can't give up is live broadcast TV. The technology of delivering live broadcast TV to the masses does not lend itself well to IP protocol. The UK proposed it a couple of years ago and abandoned the idea. If a sovereign state smaller than the state of Texas could not make it work, how do we think that would happen for the U.S.? Live broadcast TV is essential to American society. It brings us together. The existence of free over-the-air broadcast, obtainable with a simple TV antenna, is a treasure we should fight for.
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Whatever (profile), 1 Oct 2014 @ 9:06pm

You have to ask the important question though:

Will consumers stay with a company that provides only internet, if they are forced to a competitor to get TV service?

Also, if they walk away from the TV business, will a bigger company (or another company) come in, wire up the area, and offer cable and internet at a better price? We consumers using them for internet (as opposed to another choice) because they were getting TV as well? Will these consumers shift to dishes for TV and use a different internet provider?

Are they shooting themselves in the foot, cutting services and cash flow to obtain a better bottom line result in the short term, without consideration for consumer behavior after that point?
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Andyroo, 1 Oct 2014 @ 9:54pm

Re: Re: cable access
Many online entities are starting to produce content, and doing it with customer input rather than forcing something onto customers, and above that they are giving a full season in one shot so you can watch the whole season in one day if you want. Their business plan is working so even if the cable companies have different revenue sources they are not nearly as large as those with online businesses who can distribute customers through the world not just where cables are laid.
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Anonymous Coward, 2 Oct 2014 @ 2:12am

Re: Re: cable access
Where on the internet do I go to get free access to a studio with professional lighting gear, cameras,.....

You only want your solutions handed to you on a plate, are you sure that you do not want someone else to produce the programs as well.
The one thing that the Internet allows is collaborations, but that has to be coupled with dedication and hard work. While professional gear may be nice, it is not necessary, as good quality amateur gear will suffice for those on a budget. As to production software, go look at blender, and films made using it and have a look here for video editors
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Ninja (profile), 2 Oct 2014 @ 3:53am

Re:
Will consumers stay with a company that provides only internet, if they are forced to a competitor to get TV service?

Personal reply: yes. I did it for a while because the internet offerings from the TV provider was crap. Up to the time I ditched cable tv altogether. I would pay for online access to some channels depending on their cost but this is largely impossible nowadays for reasons only the cable tv companies can tell.

Also, if they walk away from the TV business, will a bigger company (or another company) come in, wire up the area, and offer cable and internet at a better price?

If they wish so. The question is, people are increasingly dropping cable so would it be profitable?

Are they shooting themselves in the foot, cutting services and cash flow to obtain a better bottom line result in the short term, without consideration for consumer behavior after that point?

Again, if they have a small set of users and the prices are becoming prohibitively high it is a good step. Add that the natural decline in cable users and they are actually setting a good future plan.
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Ninja (profile), 2 Oct 2014 @ 3:56am

Re: Streaming is great, but live TV is key
Streaming on-demand content is fantastic. But what we can't give up is live broadcast TV.

Live streaming?

The existence of free over-the-air broadcast, obtainable with a simple TV antenna, is a treasure we should fight for.

Or you can free it up for wireless internet access and provide a minimum connection for free where users can watch live streams?
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Anonymous Coward, 2 Oct 2014 @ 4:12am

Re:
Other than live events, which is more convenient for the consumers, programs on cable at the times that the media company decides, or VOD, where they can get the content when it is most convenient to them. The real question is when will the content providers accede to the consumers demand for a convenient, all content, VOD service?
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John Fenderson (profile), 2 Oct 2014 @ 6:33am

Re: Re: cable access
Amazon
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jupiterkansas (profile), 2 Oct 2014 @ 7:53am

Re: Streaming is great, but live TV is key
Live broadcast TV (and cable) was once essential to American society. It isn't anymore. Modern society can function just fine without it.

Today the internet is essential to American society, mainly because it gives everyone a voice, and not just the few people privileged enough to be able to broadcast.
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John Fenderson (profile), 2 Oct 2014 @ 8:05am

Re: Re: Re: Re: Re: Re:
I have to wait until football season is over. ;)
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Andrew D. Todd, 2 Oct 2014 @ 9:06am

Satellite Broadcast Will Inevitably Drive Out Cable Broadcast.
I commented on this general issue several years ago:

https://www.techdirt.com/articles/20090403/1015394381.shtml#c100

It is only a matter of time before the major less-developed countries decide that they want to have their own global television satellite broadcasting networks, simply as a matter of prestige. Probable candidates are India, China, Brazil, and Indonesia. India has just sent a spacecraft to Mars, as a matter of national prestige. If one looks at the way terrestrial broadcast radio (audio) used to behave, broadcasting to all the world is simply an attribute of nationality, which is normally paid for by government funds. That was the way Radio Free Europe, the BBC, Deutsche Welle, etc., all operated. While a country like Venezuela is not very likely to organize its own satellite-launching program, it may very well buy a satellite from one of the "big four," simply as a means to speak directly to North America.

It only costs a billion dollars or so to put up a satellite, capable of broadcasting to an entire continent, with a population of a couple of hundred million people or more. On that basis, the per-capita capital cost is three dollars, and, say, fifteen cents per year, or one cent per month.

Satellites exist in a space outside of the national law of the receiving country. The situation is similar to broadcasting from a ship five hundred miles out to sea. Satellites are therefore free to ignore copyright, and, operated according to the national interests of their countries, they very probably will. They don't need to bother with decoders, so they don't need to set up a consumer organization in the target countries. Radio Free Europe never expected people in Yaroslavl or Suzdal to subscribe to its service, or do anything likely to attract the attention of the KGB.

At the other end of the process, collecting television signals is simple. One of the most fundamental principles of international law is that of diplomatic immunity. An ambassador's person is sacred. Diplomats have always leveraged this into a bit of discreet contraband-trading. If they get too blatant about it, they are declared persona non grata, of course, but this is a drastic remedy. If a second or third secretary in the Nigerian embassy wants to install a small Aereo-like device which picks up television signals, and retransmits them in encrypted form over the internet to, let us say, Mumbai, so that they can be re-broadcast over the satellite thirty seconds later, it is extremely unlikely that anyone will be allowed to do anything about it.

The two American satellite broadcast systems will be forced to cut their prices to compete. This may represent a loss for the shareholders, but Dish Networks and Direct TV will be able to continue operations. The cable companies, notably Comcast, will be hit a lot harder.
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John Fenderson (profile), 2 Oct 2014 @ 10:27am

Re:
"Will consumers stay with a company that provides only internet, if they are forced to a competitor to get TV service?"

This is purely anecdotal, but amongst my friends and family, only about half make use of cable TV -- but all of them have cable-based broadband. They would certainly stay, because the TV portion is valueless to them.
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ltlw0lf (profile), 2 Oct 2014 @ 11:47am

Re: Streaming is great, but live TV is key
But what we can't give up is live broadcast TV.

Two of the TV stations near me offer live broadcast streaming of their content. You just go to the website and click the button that says "Watch TV" and you get a live stream of what is on that channel at that moment, with very little perceptible lag (I can run the stream on my computer and watch the TV and there may be as much as a couple milliseconds between the audio of both and the video is hard to see any difference.)

And I've not seen any issue with blackouts on the content. They may exist, but I am not watching the live stream when they occur to see them. The same commercials play, along with the same TV shows. The only problem is that you have to watch the content via a web-browser using a flash capable plugin.

Neither channel has sports on them, so that may be a different issue.
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John Fenderson (profile), 2 Oct 2014 @ 2:15pm

Re: Streaming is great, but live TV is key
"The technology of delivering live broadcast TV to the masses does not lend itself well to IP protocol."

This is not true, actually. The IP protocol includes the ability to do things like multicasting, specifically to allow efficient one-to-many data streams. What is true is that the internet itself is not the most efficient way of doing one-to-many datastreams. But it works pretty well despite not being terribly efficient.
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John Fenderson (profile), 2 Oct 2014 @ 2:18pm

Re: Streaming is great, but live TV is key
Ugh, I forgot to complete my comment...

"Live broadcast TV is essential to American society."

I couldn't disagree more. I would say that live broadcast TV is almost totally unimportant to American society.
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nasch (profile), 2 Oct 2014 @ 3:02pm

Re: Re: cable access
Where on the internet do I go to get free access to a studio with professional lighting gear, cameras, tripods with good fluid heads that don't bind or wobble, shotgun mikes with boom poles, pro editing software (Final Cut Pro, Adobe Premier, Avid, or the like), maybe a mobile production truck?

So there's somewhere that isn't the internet where you can get all that for free?
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nasch (profile), 2 Oct 2014 @ 3:10pm

Re:
You have to ask the important question though:

Those questions will be of rapidly decreasing relevance. I think the cable cutting trend is going to start accelerating quickly some time in the next several years.
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nasch (profile), 2 Oct 2014 @ 3:12pm

Re: Satellite Broadcast Will Inevitably Drive Out Cable Broadcast.
The cable companies, notably Comcast, will be hit a lot harder.

Why, do they operate in Mumbai?
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Andrew D. Todd, 2 Oct 2014 @ 4:02pm

Re: Re: Satellite Broadcast Will Inevitably Drive Out Cable Broadcast.
Well, once the signal is in India, it is beyond the reach of American law. The Indians can edit out the existing advertisements, stick in new ones, transmit it up to a satellite, relay it to another satellite, 20,000 miles above Ecuador, and broadcast it down to Ohio, where it _does_ compete with Comcast.
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